Voter support for carbon tax may depend on how revenue is used

As much as 67% of Americans might support a carbon tax, according to a new poll from the Energy Policy Institute at the University of Chicago (EPIC) and the Associated Press–NORC Center for Public Affairs Research.

Why it matters: 98% of economists believe that the least expensive way to slow climate change is to put a price on carbon emissions through a cap-and-trade system or tax. Although economists also suggest using revenues from carbon pricing to reduce income taxes — taxing a “bad” (carbon emissions) to reduce taxes on a “good” (income) — these poll results suggest voters prefer pairing carbon taxes with environmental spending.

Reality check: The politics of carbon pricing are challenging. Progressive Washington State has twice rejected referendums to put a price on carbon, at least partially because of aggressive advertising campaigns by fossil fuel companies and questions about how the money would be spent. Further, the American Clean Energy and Security Act failed to get a vote in the Senate in 2010, and the House of Representatives even passed a resolution last summer denouncing the idea of a carbon tax.

Yes, but: New polling released this week shows that 44% of Americans support a carbon tax. More importantly, that support varies when they are told what policies might accompany it.

• Of all the possible uses polled, the largest portion of Americans support a carbon tax whose revenue would be used for environmental restoration (67%) and renewable energy R&D (59%).
• A more modest 49% would support a tax whose revenue would be used as a tax rebate — recently advocated by a group of economists as a political sweetener — while 45% support a tax whose revenue would reduce the deficit.

• Support for a carbon tax is actually lower (34%) when respondents are told the tax policy would be accompanied by eased climate regulations.

What to watch: Pricing carbon is the most efficient way to recruit the private sector to identify and develop the cheapest emissions reductions. The American public is catching up to the consensus among scientists and economists, but whether the political establishment will remains an open question.

Michael Greenstone is the Milton Friedman Distinguished Service Professor in Economics, the College and the Harris School of Public Policy and director of its Energy Policy Institute.